Data caps, competition, AutoHop focus of future of video hearing

A top Netflix executive and the chief lobbyist for the cable television industry took shots at each other Wednesday morning during a congressional hearing on the future of video.

At issue is whether caps on broadband data usage can be used by broadband providers as a means to hinder online programming services which could be seen as a competitor to traditional broadcast and cable channels.

"When you couple limited broadband competition with a strong desire to protect a legacy video distribution business, you have both the means and motivation to engage in anti-competitive behavior," Netflix General Counsel David Hyman told the House subcommittee on communications and technology.

That comment and other suggestions that the cable industry is trying to undermine so-called over-the-top Internet-based programming competitors didn't sit too well with Michael Powell, the chairman of the National Cable & Telecommunications Assn., which is the cable industry's lobbying arm.

That conjecture, Powell snapped, is "just flatly wrong and belied by the facts." Powell, a former chairman of the Federal Communications Commission, went on to note that cable operators sell broadband and Netflix can stimulate demand for that service.

The hearing, which ran about two hours, included several prominent industry executives, including Dish Network Chairman Charlie Ergen, Hearst Television President David Barrett and Roku Senior Vice President Jim Funk. Also testifying was Gigi Sohn, chief executive of the media watchdog group Public Knowledge.

The focus of the hearing was whether the 1992 Cable Act needs to revised to better reflect the changing media landscape and the growth of new digital platforms. However, at times the conversation veered off into not only debates about data caps but also fights between cable operators and local broadcasters over distribution deals.

When the 1992 legislation was passed, cable operators dominated the pay-TV distribution business. The act was designed to encourage new competition from satellite broadcasters. Now cable accounts for less than 60% of the pay-TV business, as satellite broadcasters DirecTV and Dish have taken a big chunk of the market.

"The FCC regulates video providers based on a bygone era," said Rep. Greg Walden (R-Ore.), the chairman of the subcommittee on communications and technology.

Although all agreed that the regulatory scheme is out of date, the shape of a new structure was subject to debate. Public Knowledge's Sohn warned that the current model "limits competition and choice." In her written testimony, Sohn said the traditional media industry is "trying to limit the online distribution of independent programming."

"Everybody wants a little different deal," joked Walden.

Dish Network's commercial skipping device, the "AutoHop," was also a subject of discussion. Ergen defended the AutoHop, which is being challenged in the courts by CBS, NBC and Fox and said the issue was settled legally almost 30 years ago in the Betamax case.

Sohn also defended the AutoHop, saying the feature does not abuse copyright law.

Ergen did take some heat for the AutoHop from Rep. John Dingell (D-Mich.), who expressed concern that the feature would harm political advertising.

"I hope you understand my skepticism about Dish’s latest offering and its effect on the future of video," Dingell said.

Ergen replied: "I’m not a politician. I certainly understand consumers."